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EXHIBIT 2
CENTRAL RESERVE LIFE CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
July 1, 1998, is between CENTRAL RESERVE LIFE CORPORATION, an Ohio corporation
(the "Corporation"), and the persons and entities set forth on the signature
pages attached hereto (the "Investors").
R E C I T A L S
A. The Investors have agreed to purchase common shares, without par
value, of the Corporation (the "Common Shares") pursuant to that certain
Amended and Restated Stock Purchase Agreement of even date herewith provided
that the parties hereto enter into this Agreement.
B. The Corporation deems it desirable to enter into this Agreement in
order to induce the Investors to purchase the Common Shares pursuant to the
Stock Purchase Agreement.
AGREEMENTS
In consideration of the premises and the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Definitions. As used in this Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Shares" means the Common Shares, without par value, of the
Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means a natural person, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or other entity, or a
governmental entity or any department, agency or political subdivision thereof.
"Public Offering" means any offering by the Corporation of its equity
securities to the public pursuant to an effective registration statement under
the Securities Act or any comparable statement under any comparable federal
statute then in effect.
"Registrable Shares" means at any time (i) any Common Shares then
outstanding which were issued pursuant to the Stock Purchase Agreement; (ii)
any Common Shares then outstanding and held by any Investor (including the
Common Shares issuable upon exercise the Warrants (as defined in the Stock
Purchase Agreement)); (iii) any Common Shares then outstanding which were
issued as, or were issued directly or indirectly upon the conversion or
exercise of other securities issued as a dividend or other distribution with
respect or in replacement of any shares referred to in
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(i) or (ii); and (iv) any Common Shares then issuable directly or indirectly
upon the conversion or exercise of other securities which were issued as a
dividend or other distribution with respect to or in replacement of any shares
referred to in (i) or (ii); provided, however, that Registrable Shares shall
not include any shares which have been registered pursuant to the Securities
Act or which have been sold to the public pursuant to Rule 144 of the
Commission under the Securities Act. For purposes of this Agreement, a Person
will be deemed to be a holder of Registrable Shares whenever such Person has
the then-existing right to acquire such Registrable Shares, whether or not such
acquisition actually has been effected.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Purchase Agreement" means the Amended and Restated Stock
Purchase Agreement dated as of March 30, 1998, by and among the Company,
Strategic Acquisition Partners, L.L.C., Insurance Partners, L.P. and Insurance
Partners Offshore (Bermuda).
2. Demand Registration.
2.1 Requests for Registration. Subject to the terms of
this Agreement, the holders of at least $5,000,000 of the then market value of
the outstanding Registrable Shares may, at any time, request registration under
the Securities Act of all or part of their Registrable Shares on Form S-1 or
any similar long-form registration ("Long- Form Registrations") or, if
available, then at the option of the Company, on Form S-2 or S-3 or any similar
short-form registration ("Short-Form Registrations"). Within ten (10) days
after receipt of any request pursuant to this Section 2.1, the Corporation will
give written notice of such request to all other holders of Registrable Shares,
subject to Section 2.4, and will include in such registration all Registrable
Shares with respect to which the Corporation has received written requests for
inclusion within thirty (30) days after delivery of the Corporation's notice.
All registrations requested pursuant to this Section 2 are referred to herein
as "Demand Registrations."
2.2 Payment of Expenses for Demand Registrations. The
Corporation will pay all Registration Expenses (as defined in Section 6 below)
for two Demand Registrations initiated by Insurance Partners, L.P., one Demand
Registration initiated by Turkey Vulture Fund XIII, Ltd. and one Demand
Registration initiated by Strategic Acquisition Partners, L.L.C. (or its
principals or affiliates) (including those under Section 2.3) (whether a
Long-Form Registration or a Short-Form Registration). A registration will not
count as one of the Corporation-paid Demand Registrations until it has become
effective and the holders of Registrable Shares are able to register and sell
at least 90% of the Registrable Shares requested to be included in such
registration (or in the case of a shelf registration, it remains effective for
not less than 180 days); provided, however, that in any event the Corporation
will pay all Registration Expenses in connection with any registration
initiated as a Demand Registration even though such registration shall not
count as a Corporation-paid Demand Registration. In a Demand Registration
other than the four Demand Registrations referred to in the first sentence of
this Section (including those under Section 2.3), the Registration Expenses of
such registration shall be borne by the holders of Registrable Shares to be
registered thereunder pro rata based on the number of Registrable Shares and
other securities requested or permitted to be included in such registration
pursuant to the terms of this Agreement.
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2.3 Short-Form Registrations. Demand Registrations will
be Short-Form Registrations whenever the Corporation is permitted to use any
applicable short form. The Corporation will use its best efforts to make
Short-Form Registrations available for the sale of Registrable Shares. If a
Short-Form Registration is to be an underwritten public offering, and if the
underwriters for marketing or other reasons request the inclusion in the
registration statement of information which is not required under the
Securities Act to be included in a registration statement on the applicable
form for the Short-Form Registration, the Corporation will provide such
information as may be reasonably requested for inclusion by the underwriters in
the Short-Form Registration.
2.4 Priority. If a Demand Registration is an
underwritten public offering and the managing underwriters advise the
Corporation in writing that in their opinion the inclusion of the number of
Registrable Shares and other securities requested to be included (by the
Corporation or others) creates a substantial risk that the price per Common
Share will be reduced, the Corporation will include in such registration, prior
to the inclusion of any securities which are not Registrable Shares, the number
of Registrable Shares requested to be included which in the opinion of such
underwriters can be sold without creating such a risk, pro rata among the
respective holders of Registrable Shares on the basis of the number of
Registrable Shares owned by such holders, with further successive pro rata
allocations among the holders of Registrable Shares if any such holder of
Registrable Shares has requested the registration of less than all such
Registrable Shares it is entitled to register.
2.5 Restrictions. The Corporation will not be obligated
to effect any Demand Registration within 180 days after the effective date of a
previous Demand Registration. The Corporation may postpone for up to ninety
(90) days the filing or the effectiveness (but not the preparation) of a
registration statement for a Demand Registration if the Board of Directors of
the Corporation reasonably and in good faith determines that such filing would
require a disclosure of a material fact that would have a material adverse
effect on the Corporation or any plan by the Corporation to engage in any
acquisition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other significant transaction. In order
to postpone the filing of a registration statement pursuant to this Section
2.5, the Corporation shall promptly (but in any event within ten (10) days),
upon determining to seek such postponement, deliver to each holder who has
requested the registration of all or any part of its Registrable Shares, a
certificate signed by an executive officer of the Corporation stating that the
Corporation is postponing such filing pursuant to this Section 2.5 and a
general statement of the reason for such postponement and an approximation of
the anticipated delay. Within twenty (20) days after receiving such
certificate, the holders of a majority of the Registrable Shares held who have
requested the registration of all or any part of their respective Registrable
Shares and for which registration was previously requested may withdraw such
demand request by giving written notice to the Corporation; if withdrawn, the
demand request shall be deemed not to have been made for all purposes of this
Agreement. The Corporation may postpone the filing of a particular
registration statement pursuant to this Section 2.5 only once.
2.6 Selection of Underwriters. The holders of at least
a majority of the Registrable Shares included in any Demand Registration shall
have the right to select the investment banker(s)
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and manager(s) to administer the offering, subject to the Corporation's
approval which will not be unreasonably withheld or delayed, and any existing
contract rights of Advest, Inc.
3. Piggyback Registration.
3.1 Right to Piggyback. Whenever the Corporation
proposes to register any of its equity securities under the Securities Act
(other than pursuant to a Demand Registration hereunder or on Form S-8 or S-4
or any successor form thereto) and the registration form to be used may be used
for the registration of any Registrable Shares (a "Piggyback Registration"),
the Corporation will give prompt written notice (which shall be given not less
than thirty (30) days prior to the effective date of the registration
statement) to all holders of the Registrable Shares of its intention to effect
such a registration and will include in such registration all Registrable
Shares (in accordance with the priorities set forth in Sections 3.2 and 3.3
below) with respect to which the Corporation has received written requests for
inclusion within fifteen (15) days after the delivery of the Corporation's
notice.
3.2 Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Corporation and the managing underwriters advise the Corporation in writing
that in their opinion the number of securities requested to be included in the
registration creates a substantial risk that the price per Common Share will be
reduced, the Corporation will include in such registration first, the
securities that the Corporation proposes to sell, second, the Registrable
Shares requested to be included in such registration, pro rata among the
holders of such Registrable Shares on the basis of the number of shares which
are owned by such holders, and third, other securities requested to be included
in such registration.
3.3 Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Corporation's securities and the managing underwriters advise the
Corporation in writing that in their opinion the number of securities requested
to be included in the registration creates a substantial risk that the price
per Common Share will be reduced, the Corporation will include in such
registration first, the securities requested to be included therein by the
holders requesting such registration and the Registrable Shares requested to be
included in such registration, pro rata among the holders of such securities on
the basis of the number of Common Shares or Registrable Shares which are owned
by such holders, and second, other securities requested to be included in such
registration.
3.4 Other Registrations. If the Corporation has
previously filed a registration statement with respect to Registrable Shares
pursuant to Section 2 or pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the Corporation will not file
or cause to be effected any other registration of any of its equity securities
or securities convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (except on Form S-8 or any successor form),
whether on its own behalf or at the request of any holder or holders of such
securities, until a period of at least 180 days has elapsed from the effective
date of such previous registration.
3.5 Selection of Underwriters. In connection with any
Piggyback Registration, the holders of at least a majority of the Registrable
Shares requested to be registered shall have the right
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to select the managing underwriters (subject to the approval of the Corporation
which shall not be unreasonably withheld or delayed) to administer any offering
of the Corporation's securities in which the Corporation does not participate,
and the Corporation will have such right in any offering in which it
participates.
4. Holdback Agreements.
4.1 Holders' Agreements. Each holder of Registrable
Shares agrees not to effect any public sale or distribution of equity
securities of the Corporation, or any securities convertible into or
exchangeable or exercisable for such securities or make any demand for
registration under Sections 2 or 3 hereof, during the seven (7) days prior to,
and during the ninety (90) days following, the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration in
which Registrable Shares are included (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree. Nothing herein shall prevent a holder of Registrable Shares
that is a partnership from making a distribution of Registrable Shares to its
partners, a holder of Registrable Shares that is a trust from making a
distribution of Registrable Shares to its beneficiaries or a holder of
Registrable Shares that is a corporation from making a distribution of
Registrable Shares to its stockholders, provided that the transferees of such
Registrable Shares agree to be bound by the provisions of this Agreement to the
extent the transferor would be so bound.
4.2 Corporation's Agreements. The Corporation agrees
(i) not to effect any public sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven (7) days prior to, and during the ninety (90) days
following, the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise
agree, (ii) to use all reasonable efforts to cause each holder of at least five
percent (5%) (on a fully diluted basis) of its equity securities, or any
securities convertible into or exchangeable or exercisable for such securities
to agree not to effect any public sale or distribution of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree, subject to the registration obligations of the
Company under the Common Share Purchase Warrants and (iii) if requested by the
underwriters managing the registered public offering, to use all reasonable
efforts to cause each other holder of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, purchased
from the Corporation at any time (other than in a registered public offering)
to agree not to effect any public sale or distribution of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree, subject to the registration obligations of the
Company under the Common Share Purchase Warrants.
5. Registration Procedures. Whenever the holders of Registrable
Shares have requested that any Registrable Shares be registered pursuant to
this Agreement, the Corporation will use its best efforts to effect the
registration and sale of such Registrable Shares in accordance with the
intended method of disposition thereof and, pursuant thereto, the Corporation
will as expeditiously as possible:
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(a) prepare and file with the Commission a registration statement with
respect to such Registrable Shares and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus, or any amendments or supplements thereto,
the Corporation will furnish copies of all such documents proposed to be filed
to the counsel or counsels for the sellers of the Registrable Shares covered by
such registration statement);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus(es) used in
connection therewith as may be necessary to keep such registration statement
effective for a period of not less than nine months and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Shares and the
underwriters such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus(es) included in such
registration statement (including each preliminary prospectus) and such other
documents as such seller or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Shares;
(d) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions as
any seller or underwriter reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller or
underwriter to consummate the disposition in such jurisdictions of the
Registrable Shares (provided that the Corporation will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (ii) consent to
general service of process in any such jurisdiction);
(e) promptly notify each seller of such Registrable Shares, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Corporation will
prepare a supplement or amendment to such prospectus or registration statement
so that, as thereafter delivered to the purchasers of such Registrable Shares,
such prospectus or registration statement will not contain any untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein not misleading;
(f) cause all such Registrable Shares to be (i) listed on each
securities exchange on which similar securities issued by the Corporation are
then listed, (ii) authorized to be quoted and/or listed (to the extent
applicable) on the NASD Automated Quotation System or The Nasdaq National
Market if the Registrable Shares so qualify, or (iii) if no similar securities
issued by the Corporation are then listed on a securities exchange, a
securities exchange selected by the holders of at least a majority of the
Registrable Shares included in such registration;
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(g) provide a transfer agent and registrar for all such Registrable
Shares not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
at least a majority of the Registrable Shares being sold or the underwriters,
if any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Shares (including, but not limited to, effecting a stock
split or a combination of shares).
(i) make available for inspection by any seller of Registrable Shares,
any underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Corporation, and cause the Corporation's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) advise each seller of such Registrable Shares, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission or any state securities or other regulatory authority
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceeding for such purpose and promptly use all best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued;
(k) at least forty eight (48) hours prior to the filing of any
registration statement or prospectus, or any amendment or supplement to such
registration statement or prospectus, furnish a copy thereof to each seller of
such Registrable Shares and refrain from filing any such registration
statement, prospectus, amendment or supplement to which counsel selected by the
holders of at least a majority of the Registrable Shares being registered shall
have reasonably objected on the grounds that such document does not comply in
all material respects with the requirements of the Securities Act or the rules
and regulations thereunder, unless, in the case of an amendment or supplement,
in the opinion of counsel for the Corporation the filing of such amendment or
supplement is reasonably necessary to protect the Corporation from any
liabilities under any applicable federal or state law and such filing will not
violate applicable laws;
(l) at the request of any seller of such Registrable Shares in
connection with an underwritten offering, furnish on the date or dates provided
for in the underwriting agreement: (i) an opinion of counsel, addressed to the
underwriters and the sellers of Registrable Shares, covering such matters as
such underwriters and sellers may reasonably request, including such matters as
are customarily furnished in connection with an underwritten offering and (ii)
a letter or letters from the independent certified public accountants of the
Corporation addressed to the underwriters and the sellers of Registrable
Shares, covering such matters as such underwriters and sellers may reasonably
request, in which letter(s) such accountants shall state, without limiting the
generality of the foregoing, that they are independent certified public
accountants within the meaning of the Securities Act and that in their opinion
the financial statements and other financial data of the Corporation included
in the registration statement, the prospectus(es),
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or any amendment or supplement thereto, comply in all material respects with
the applicable accounting requirements of the Securities Act;
(m) make generally available to the Corporation's securityholders an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act no later than thirty (30) days after the end of the twelve (12) month
period beginning with the first day of the Corporation's first fiscal quarter
commencing after the effective date of a registration statement, which earnings
statement shall cover such twelve (12) month period, and which requirement will
be deemed to be satisfied if the Corporation timely files complete and accurate
information on Forms 10-Q, 10-K, and 8-K under the Exchange Act and otherwise
complies with Rule 158 under the Securities Act;
(n) If requested by the managing underwriter or any seller promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or any seller reasonably requests to be
included therein, including, without limitation, with respect to the
Registrable Shares being sold by such seller, the purchase price being paid
therefor by the underwriters and with respect to any other terms of the
underwritten offering of the Registrable Shares to be sold in such offering,
and promptly make all required filings of such prospectus supplement or
post-effective amendment;
(o) cooperate with each seller and each underwriter participating in
the disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the NASD;
(p) during the period when the prospectus is required to be delivered
under the Securities Act, promptly file all documents required to be filed with
the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act; and
(q) notify each seller of Registrable Shares promptly of any request
by the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information.
6. Registration Expenses.
6.1 Corporation's Expenses. Except as provided in
Section 2.2 hereof, all expenses incident to the Corporation's performance of
or compliance with this Agreement, including, but not limited to, all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, messenger and delivery expenses, and fees
and disbursements of counsel for the Corporation and all independent certified
public accountants, underwriters (excluding discounts and commissions) and
other Persons retained by the Corporation (all such expenses being herein
called "Registration Expenses"), will be borne by the Corporation. In
addition, the Corporation will pay its internal expenses (including, but not
limited to, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance obtained by the Corporation; the
expenses and fees for listing the securities to be registered on each
securities exchange, expenses
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incurred in obtaining any comfort letters, and all fees and expenses associated
with filings required to be made with the NASD.
6.2 Holder's Expenses. Except as provided in Section
2.2 hereof, in connection with any registration statement in which Registrable
Shares are included, the Corporation will reimburse the holders of Registrable
Shares covered by such registration for the reasonable cost and expenses
incurred by such holders in connection with such registration, including, but
not limited to, reasonable fees and disbursements of one counsel chosen by the
holders of at least a majority of such Registrable Shares.
7. Indemnification.
7.1 By the Corporation. The Corporation agrees to
indemnify and reimburse, to the fullest extent permitted by law, each holder of
Registrable Shares, its officers and directors and each Person who controls
such holder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses (including, but not limited to,
attorney's fees) caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus, or any amendment thereof or supplement thereto, or any omission or
alleged omission of a material fact, required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
directly caused by statements or omissions made in reliance on and in strict
conformity with the information furnished in writing to the Corporation by such
holder expressly for use therein or by such holder's failure to deliver a copy
of the prospectus or any amendments or supplements thereto after the
Corporation has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Corporation will
indemnify such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
extent customary. The payments required by this Section 7.1 will be made
periodically during the course of the investigation or defense, as and when
bills are received or expenses incurred, subject to an obligation of repayment
in the event such indemnity is determined not to be owed.
7.2 By Each Holder. In connection with any registration
statement in which a holder of Registrable Shares is participating, each such
holder will furnish to the Corporation in writing such information as the
Corporation reasonably requests for use in connection with any such
registration statement, preliminary prospectus or prospectus, or any amendment
or supplement thereto and, to the extent permitted by law, will indemnify the
Corporation, its directors and officers and each Person who controls the
Corporation (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus, or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information so furnished in writing by such holder specifically for inclusion
in the registration statement or prospectus; provided, that the obligation to
indemnify will be several, and not joint and several, among such sellers of
Registrable Shares, and the liability of each such seller of Registrable Shares
will be in proportion to, and provided further
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that such liability will be limited to, the net amount received by such seller
from the sale of Registrable Shares pursuant to such registration statement;
further provided, however, that such seller of Registrable Shares shall not be
liable in any such case to the extent that prior to the filing of any such
registration statement or prospectus or amendment thereof or supplement
thereto, such seller has furnished in writing to the Corporation information
expressly for use in such registration statement or prospectus or any amendment
thereof or supplement thereto that corrected or made not misleading information
previously furnished to the Corporation.
7.3 Procedure. Any Person entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying Person of any
claim with respect to which it seeks indemnification (provided that the failure
to give such notice shall not limit the rights of such Person except to the
extent such failure to provide notice materially prejudices the indemnifying
Person) and (ii) unless in such indemnified Person's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying Person to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
Person; provided, however, that any Person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in
the defense of such claim, but the fees and expenses of such counsel shall be
at the expense of such Person unless (x) the indemnifying party has agreed to
pay such fees or expenses, or (y) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to
such Person. If such defense is not assumed by the indemnifying party as
permitted hereunder, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably delayed or withheld). If such
defense is assumed by the indemnifying party pursuant to the provisions hereof,
such indemnifying party shall not settle or otherwise compromise the applicable
claim unless (i) such settlement or compromise contains a full and
unconditional release of the indemnified party or (ii) the indemnified party
otherwise consents in writing. An indemnifying Person who is not entitled to,
or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying Person with respect to such claim, unless in the reasonable
judgment of any indemnified Person a conflict of interest may exist between
such indemnified Person and any other of such indemnified parties with respect
to such claim.
7.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 7.1 or 7.2 are unavailable
to or insufficient to hold harmless an indemnified party in respect of any
losses, liabilities, claims, damages, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, liabilities, claims, damages, or expenses (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, liabilities, claims, damages, or expenses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or
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omission. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7.4 were determined by pro rata
allocation (even if the holders or any underwriters or all of them were treated
as one Person for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in this Section
7.4, The amount paid or payable by an indemnified party as a result of the
losses, liabilities, claims, damages, or expenses (or actions in respect
thereafter referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such indemnified party in connection with
investigating or, except as provided in Section 7.3, defending any such action
or claim. Notwithstanding the provisions of this Section 7.4, no holder shall
be required to contribute an amount greater than the dollar amount by which the
net proceeds received by such holder with respect to the sale of any
Registrable Shares exceeds the amount of damages which such holder has
otherwise been required to pay by reason of any and all untrue or alleged
untrue statements of material fact or omissions or alleged omissions of
material fact made in any registration statement, prospectus, or preliminary
prospectus or any amendment thereof or supplement thereto, related to such sale
of Registrable Shares. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The holders' obligations in this Section 7.4 to contribute
shall be several in proportion to the amount of Registrable Shares registered
by them and not joint. If indemnification is available under this Section 7,
the indemnifying parties shall indemnify each indemnified party to the full
extent provided in Sections 7.1 and 7.2 without regard to the relative fault of
such indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 7.4 subject, in the case of the
holders, to the limited dollar amounts get forth in Section 7.2.
7.5 Survival. The indemnification provided for under
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified Person or any officer,
director or controlling Person of such indemnified Person and will survive the
transfer of securities. The Corporation also agrees to make such provisions as
are reasonably requested by any indemnified Person for contribution to such
Person in the event the Corporation's indemnification is unavailable for any
reason.
8. Compliance with Rule 144 and Rule 144A. At the request of any
holder of Registrable Shares who proposes to sell securities in compliance with
Rule 144 of the Commission, the Corporation will (i) forthwith furnish to such
holder a written statement of compliance with the filing requirements of the
Commission as set forth in Rule 144, as such rule may be amended from time to
time and (ii) make available to the public and such holders such information as
will enable the holders of Registrable Shares to make sales pursuant to Rule
144. Unless the Corporation is subject to Section 13 or 15(d) of the Exchange
Act, the Corporation will provide to the holder of Registrable Shares and to
any prospective purchaser of Registrable Shares under Rule 144A of the
Commission, the information described in Rule 144A(d)(4) of the Commission.
9. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell its securities on the basis provided in any
underwriting arrangements approved by such Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, custody agreements, indemnities, underwriting agreements
and other documents
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reasonably required under the terms of such underwriting arrangements;
provided, that no holder of Registrable Shares shall be required to make any
representations or warranties in connection with any registration other than as
to (i) such holder's ownership of his or its Registrable Shares to be sold or
transferred free and clear of all liens, claims, and encumbrances, (ii) such
holder's power and authority to effect such transfer, and (iii) such matters
pertaining to the compliance with securities laws as may be reasonably
requested; provided, further, that the obligation of such holder to indemnify
pursuant to any such underwriting arrangements shall be several, not joint and
several, among such holders selling Registrable Shares, and the liability of
each such holder will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such holder from the
sale of his or its Registrable Shares pursuant to such registration.
10. Miscellaneous.
10.1 No Inconsistent Agreements. The Corporation will
not hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Shares in
this Agreement.
10.2 Adjustments Affecting Registrable Shares. The
Corporation will not take any action, or permit any change to occur, with
respect to its securities which would adversely affect the ability of the
holders of Registrable Shares to include such Registrable Shares in a
registration undertaken pursuant to this Agreement or which would adversely
affect the marketability of such Registrable Shares in any such registration,
including, but not limited to, effecting a stock split or combination of
shares.
10.3 Other Registration Rights. Except as provided in
this Agreement, the Corporation will not hereafter grant to any Person or
Persons the right to request the Corporation to register any equity securities
of the Corporation, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of the
holders of at least a majority of the Registrable Shares.
10.4 Remedies. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages caused by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law, in
equity, or otherwise.
10.5 Amendments and Waivers. Except as otherwise
expressly provided herein, the provisions of this Agreement may be amended or
waived at any time only by the written agreement of the Corporation and the
holders of at least a majority of the Registrable Shares; provided, however,
that the provisions of this Agreement may not be amended or waived without the
consent of the holders of all the Registrable Shares adversely affected by such
amendment or waiver if such amendment or waiver adversely affects a portion of
the Registrable Shares but does not so adversely affect all of the Registrable
Shares. Any waiver, permit, consent or approval of any kind or character on
the part of any such holders of any provision or condition of this Agreement
must be made in writing and shall be effective only to the extent specifically
set forth in writing.
-12-
13
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of Registrable Securities and the Corporation.
10.6 Successors and Assigns. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto,
whether so expressed or not. In addition, and whether or not any express
assignment has been made, the provisions of this Agreement which are for the
benefit of the Investors or holders of Registrable Shares are also for the
benefit of, and enforceable by, any subsequent holders of such Registrable
Shares.
10.7 Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
10.8 Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience of reference only and do not
constitute a part of and shall not be utilized in interpreting this Agreement.
10.9 Notices. Any notices required or permitted to be
sent hereunder shall be delivered personally or mailed, certified mail, return
receipt requested, or delivered by overnight courier service to the following
addresses, or such other address as any Person designates by written notice to
the Corporation, and shall be deemed to have been given upon delivery, if
delivered personally, three days after mailing, if mailed, or one business day
after delivery to the courier, if delivered by overnight courier service:
If to the Corporation, to:
Central Reserve Life Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxx 00000
with a copy to:
Xxxxxx & Xxxxxxx
5800 Sears Tower
000 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx
Attention: Xxxx X. Xxxxxxxx
If to the Investors, to the addresses set forth on the Signature pages
hereto.
If to holders of the Registrable Shares other than the Investors, to
the addresses set forth on the stock record books of the Corporation.
-13-
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10.10 Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement, and the
performance of the obligations imposed by this Agreement, shall be governed by
the laws of the State of Ohio applicable to contracts made and wholly to be
performed in that state.
10.11 Final Agreement. This Agreement, together with the
Stock Purchase Agreement and all other agreements entered into by the parties
hereto pursuant to the Stock Purchase Agreement, constitutes the complete and
final agreement of the parties concerning the matters referred to herein, and
supersedes all prior agreements and understandings.
10.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and such counterparts together shall
constitute one instrument.
10.13 No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be used
against any Person.
[Remainder of page intentionally left blank.
Signature pages follow.]
-14-
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The parties hereto have executed this Agreement on the date first
above written.
THE CORPORATION:
CENTRAL RESERVE LIFE CORPORATION
By: /s/ XXXXX X. XXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: CFO
16
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
INSURANCE PARTNERS, L.P.
By: Insurance GenPar, L.P.,
its General Partner
By: Insurance GenPar MGP, L.P.
its General Partner
By: Insurance GenPar MGP, Inc.,
its General Partner
By: /s/ XXXXXX SPASS
-----------------------------
Name: Xxxxxx Spass
---------------------------
Title: President
--------------------------
Address:
One Chase Xxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx & Xxxxxx
Copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
17
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
By: Insurance Genpar (Bermuda), L.P.,
its General Partner
By: Insurance GenPar MGP (Bermuda), L.P.,
its General Partner
By: Insurance GenPar MGP (Bermuda), Inc.,
its General Partner
By: /s/ XXXXXX SPASS
----------------------------------------
Name: Xxxxxx Spass
--------------------------------------
Title: President
-------------------------------------
Address:
One Chase Xxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx & Xxxxxx
Copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
18
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ XXXXX X. XXXXXX
-----------------------------------
Xxxxx X. Xxxxxx
Address:
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Copy to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
19
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ XXXXXXX X. XXXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Address:
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
20
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
MERCANTILE BANK OF NORTHERN ILLINOIS,
TRUSTEE OF THE CONSECO STOCK OPTION DIRECTOR
PLAN FBO XXXXXXX XXXXXXXX #08590033
By: /s/ XXXXX X. XXXXXXX
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------------
Title: Trust Officer
----------------------------------------
Address:
X.X. Xxx 00
Xxxxxxxx, Xxxxxxxx 00000
Copy to:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
21
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
MERCANTILE BANK OF NORTHERN ILLINOIS,
TRUSTEE OF THE CONSECO STOCK OPTION DIRECTOR PLAN
FBO XXXXXXX XXXXXXXX #08590034
By: /s/ XXXXX X. XXXXXXX
----------------------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------------------
Title: Trust Officer
-------------------------------------------
Address:
X.X. Xxx 00
Xxxxxxxx, Xxxxxxxx 00000
Copy to:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
22
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ XXXXX XXXX
-----------------------------------
Xxxxx Xxxx
Address:
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
23
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ XXX XXXXX
-----------------------------------
Xxx Xxxxx
Address:
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
24
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
TURKEY VULTURE FUND XIII, LTD.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
-----------------------------
Title: Manager
----------------------------
Address:
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Copy to:
Xxxxxxx, Xxxxxxx & Xxxxxx P.L.L.
0000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx
25
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ XXXX X. XXXXXX
-----------------------------------
Xxxx X. Xxxxxx
Address:
Xxxxxxx, Xxxxxxx & Xxxxxx P.L.L.
0000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
26
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
KRANTZ FAMILY LIMITED PARTNERSHIP
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Xxxxx X. Xxxxxx, its General Partner
Address:
Xxxxxxx, Xxxxxxx & Xxxxxx P.L.L.
0000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
27
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
MEDICAL MUTUAL OF OHIO
By: /s/ XXXXXX X. XXXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------
Title: Corporate Secretary
------------------------------
Address:
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: General Counsel
28
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
UNITED PAYORS AND UNITED PROVIDERS, INC.
By: /s/ X. X. XXXXX
-------------------------------------
Name: X. X. Xxxxx
-----------------------------------
Title: V.P. and CPO
----------------------------------
Address:
0000 Xxxxxxxx Xxxx.
0xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxx
29
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ XXXXXX X. XXXXXX
-----------------------------------
Xxxxxx X. Xxxxxx
Address:
c/x Xxxx Partners
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
30
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
XXXXXX XXXXXXXX XXX
By: /s/ XXXXXX XXXXXXXX, XXX
-------------------------------
Name: Xxxxxx Xxxxxxxx, XXX
-----------------------------
Title:
----------------------------
Address:
c/x Xxxx Partners
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
31
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
LEG PARTNERS SBIC, L.P.
By: /s/ XXXXXXXX XXXXX
--------------------------------
Name: President of Xxxxx XX II
Corporation
------------------------------
Title: General Partner
-----------------------------
Address:
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxx
